Introduction

Thank you for the introduction and for inviting me to join you this afternoon. I welcome this opportunity to talk to you about the work of my office and to answer any questions you may have.

In my presentation, I plan to discuss:

• The general role of my Office,
• Several recent initiatives taken by BC legislators that will affect all of us.
• Examples of the work we do that might be particularly interesting or relevant to you

My presentation is about 25 minutes. After, I will do my best to answer your questions or, if I cannot, I welcome the opportunity to listen to your views and concerns.

As the Auditor General, I work for and report to the Legislative Assembly.

I was appointed by an all-party committee of legislators which had the responsibility to recommend to the Assembly—unanimously—a person to be the Auditor General for a term of 6 years. I have now held this position for three years.

I report to the Assembly. My reports—which are public—are automatically referred to a standing committee of the Assembly which has the responsibility of dealing with the contents of my reports in meetings open to the public and the media.

Public scrutiny is key to ensuring the advice of my Office leads to constructive and meaningful change—and it does.

In general, the role of an Auditor General is to help legislators and, thus, the people of BC, hold the government accountable for its use of public resources and for its management of the considerable responsibilities entrusted to government.

I hold the view that an essential ingredient to public confidence in our institutions of government is a meaningful and rigorous public scrutiny of performance.

Through our work, we provide assurances and advice to support such a scrutiny.

Our goal is that legislators and the public receive the best information possible for assessing the performance of the provincial public sector.

The outcome I pursue is a healthier debate of policy alternatives in the context of a growing public confidence that no matter which policy alternative is chosen it will be well managed.

In our work, we have three key objectives each supported by a line of business for which we allocate our resources and energies.

Firstly, we assess how well the public sector manages the key risks it faces in achieving its planned results – we want legislators and the people they represent to be fully informed of the management of key risks associated with public programs and services.

Secondly, we review the quality of the broader performance information provided by public sector organizations to legislators and BC people in the form of service plans and service plan reports—those reports should fairly present organizational performance

Thirdly, we attest to the reliability of financial statements to ensure the statements fairly present financial performance including reliable measures of such key items as surplus or deficit.

I have an Office of about 90 people with a wide range of professional credentials and experience—we are a small office in the context of the size of BC when compared to similar offices in Alberta, Saskatchewan and Quebec—so we try to leverage our work and thinking through relationships with others, including committees of legislators, central agencies of government, ministries, public accounting firms, and the Canadian Auditor General community.

We have access to all parts of the provincial public sector, to all types of information, we can follow the dollar to nonpublic sector organizations, and we decide what to report and when.

Our reports are public documents. You can access all of our reports on our website at www.bcauditor.com. Each year, we issue about 10 major reports—one of those reports was released on Tuesday dealing with the performance agreements between the ministry of health services and each of the six provincial health authorities.

Recent initiatives of BC legislators

During the past three years, BC legislators have changed significantly their expectations as to what needs to be put in place to help them carry out a more meaningful scrutiny of the performance of the provincial public sector.

The changes affect all of us who work within the provincial public sector. The changes include:

• Requiring government to present its annual financial plan or budget in the second week of February
• Requiring government ministries, Crown corporations and Crown agencies to publish service plans on the same day that the government presents its annual plan
• Requiring the government to adopt generally accepted accounting principles for the preparation of its annual financial plan and its annual financial statements
• Requiring performance reports to be published in a more timely manner
• And, putting in law the expectation that service plans and performance reports should focus on costs and the results achieved

In addition, legislators have put in place a more active system of standing committees which are assigned responsibility to carry out public scrutiny of the performance of key programs such as health and education.

More recently in March, legislators changed the Auditor General Act so that they directly oversee the financial statement audit system for the provincial public sector.

Under the new system, each year, beginning this fall, I am to present a proposal to a standing committee of legislators setting out a plan for the system of financial statement audits within the provincial public sector and provide legislators with an assessment of the financial statement audit system in terms of whether or not it is meeting their needs.

Last month, I wrote to you Boards and current auditors about this new expectation of legislators and that my office is developing a proposal to discuss with key stakeholders over the next four months.

All of these changes initiated by our elected representatives will affect the work of all of us for the foreseeable future.

I think the changes set the stage for a significant advancement in public sector management and accountability practice.

Risk management examinations

Our first line of business focuses on examining the risk management practices of public sector organizations.

This work is particularly important given the significant change, restructuring, and down sizing now taking place across the provincial public sector. During such a period, organizations face considerable risk to the effective delivery of programs and services and the effective use of scarce public resources.

We devote about 40% of our resources to these examinations.

As you might expect given the diverse range of public sector services and programs, we examine an equally diverse range of risk management issues.

For example, during the past year we have examined and reported publicly on issues such as:

• How government is managing information technology both from a financial investment point of view and a security point of view
• How government is managing the risk of wildfires spreading to places where people live and work
• We examined the extent to which the health system uses sound cost and performance information
• The extent to which the work environment in a major component of the public service is healthy
• The extent to which contaminated sites on Crown land are well managed
  We reviewed the governance and accountability practices for the new public sector pension arrangements—as you probably know, under the new arrangements employers and employees now share risk of unfunded liability equally—a major change
• We examined the due diligence carried out in preparation of the province’s 2010 Olympic bid. We wanted to ensure—to the extent we can—that BC people know whether a rigorous due diligence was used to prepare the bid estimate, and that there is a solid baseline of information against which this overall undertaking and any future spending can be assessed. We think we did this.
• On Tuesday of this week, we released our report on our examination of the performance agreements put in place between the Minister of Health and each of the Regional Health Authorities.
  • We think such agreements represent an opportunity to strengthen management of our system of health. The ministry of health services advises us that our recommendations are already having a significant impact on how these agreements are being restructured so that they become a key accountability mechanism between the ministry and the health authorities

We also examine risk management issues in the education sector.

In the past, we have reported on how well the Ministry of Education was managing programs for curriculum development, special education and facilities. We have also looked at how school districts manage purchasing decisions.

More recently, we examined how the BC public school system was doing in fostering a safe learning environment—a report that I hear was well received by those in the system.

Currently, we are assessing the extent to which the BC public school system is developing capacities and processes to manage and support continuous education improvement and to demonstrate accountability for results.

In February and March we visited 7 districts: Rocky Mountain, Kelowna, Williams Lake, Surrey, Prince George, Saanich and North Island—so those of you who are from those districts will have met members of my staff working on this audit.

We are not examining the performance of individual school districts or schools—rather, we are looking at the system as a whole, and how all the players are developing capacities needed to collaborate and lead the way in making continuous improvements.

The seven districts were selected in a way that we hope will give us a more robust perspective.

This examination comes at a time when a lot of attention is being focused on how the public school system is adapting to changes underway. We are tracking the results of reviews by the Ministry of Education and related task forces, and we are meeting with the College of Teachers, the BC Confederation of Parent Advisory Councils, and various professional associations (such as the BC Superintendents’ Association, BC Principals’ and Vice-Principals’ Association, and the BC Teachers’ Federation).

We are still gathering, organizing and analysing information, so it is too soon for me to tell you what we will be concluding and recommending.

All of our reports on risk management are public. Each of our reports and every one of our recommendations is debated in public by the standing committee on public accounts.

Our work on the quality of performance reports

Our second line of business focuses on the quality of the broader performance information used and reported by the provincial public sector and the growing demand from legislators for results-focused performance information.

On this front, BC legislators have taken a significant leadership position by directing government through laws:

• To publish its proposed overall financial plan each February
• To publish, on that same day, three year plans for each of its organizations,
• To publish annual performance reports in a timely manner, and
• To focus those plans and reports on the results achieved in terms of measurable objectives and in terms of key performance indicators and targets

With this direction put into law and with a more active system of standing committees in place, our elected representatives have set the stage for what I believe can be a significant advancement in public sector management and accountability practice.

I support these measures fully and whole heartedly.

Now, no doubt many of you have heard similar best intentions before. I certainly have!

What is different this time I think is that—at the same time—consensus is emerging across Canada on guiding principles for public performance reporting.

The consensus building has been led by the CCAF, a national research and education foundation previously known as the Canadian Comprehensive Auditing Foundation.

Many of you are likely familiar with the work of the Foundation, its core interest centres on the role that information plays in a variety of public sector governance, accountability, management and assurance settings.

A robust, cohesive set of reporting principles has been under development for several years. The proposed principles have gone through much consultation with elected officials, management groups, and auditors.

Discussions are also being held by the CICA’s public sector accounting board on how best to begin the arduous, long-term work of moving to more formal guidance and standards.

Recently, we used this framework of principles to guide our examination of the annual performance report of the Public Guardian Trustee. This was the first time we opined on a complete performance report.

We are also working with government officials on a proposal to a standing committee of legislators—we plan to ask legislators to support the principles as part of the performance management and accountability expectations across the BC public sector.

During this summer, we will be examining the March 31st, 2003 service plan reports of many Ministries, Crown corporations and agencies to determine the extent to which they have made progress on adopting the principles of performance reports.

We will report our findings in the fall. This represents a second significant step forward that can lead to much positive change in the BC public sector—a step that can make BC a leader—if the initiative is adequately supported and nurtured.

Our financial statement work

Our third line of business is attesting to the reliability of financial statements, and, once again, significant change is taking place.

As I said earlier BC legislators have put in place laws that require the government to adopt generally accepted accounting principles, no later than April 2004—BC is the only Canadian jurisdiction that now legally requires government to do this.

Adopting and implementing generally accepted accounting principles within the government’s financial plan and annual financial statements represents a particularly important opportunity and challenge.

A complete accounting of financial results provides the foundation required by public sector managers to improve the quality of the cost and performance information they use and report publicly.

The foundation required by legislators to carry out a meaningful public scrutiny of provincial public sector performance.

As you might know—last year—in my audit opinion on the government’s summary consolidated financial statements, I report those statements are significantly incomplete because they do not include the full financial results of the government’s health and education programs. For the year ended March 31st, 2002, for example, the annual deficit is overstated by some $225 million. Liabilities and assets are both understated.

My office is working with many officials across the public sector to ensure the move to rigorous accounting rules takes place, beginning with the government’s annual budget to be presented next February.

I realize that, as part of this, you and your staff will be expected to prepare financial information that can be more readily incorporated into government summary statements.

My office is working with the Comptroller General’s Office and the Ministry of Education and is meeting with representatives of your community to develop ways of getting this done in the most efficient manner.

The bottom line though, is that I need to be able to assure myself, using generally accepted auditing standards, that for the year ending March 31st, 2005, the government’s summary financial statements—including school district numbers—is reliable and accurate.

I have asked my staff to participate in meetings that are taking place to consider what can be done to consider options for providing more timely and accurate information.

Concluding comments

Well — as I said — Much is going on within the provincial public sector. Significant and pervasive change is being initiated by our elected representatives.

This afternoon, I reviewed some of the work my Office is doing that may be of particular interest or relevance to you focusing on changes initiated by legislators, and our examinations of risk management, performance reporting, and financial statements.

Thank you for inviting me to speak at your meeting. I appreciate your interest. Now, if you have questions, concerns or suggestions, I will try to answer them and I will listen.

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